I Get Seriously Intrigued
Once I was convinced that these planetary cycle to market correlations
were not accidental, but something that could be traced scientifically,
I began some very serious research work. Since I had a computer model
of the planets, I could easily add equations to describe various forms
of energy transfer. One of the models I came up with I now call Astro
Points or the AstroPoint Index. It is a set of equations driven by
the planetary model that produces a time series. This time series
gives me points in time when I expect there to be outbursts of solar
energy. The correlation of this time series with highs and lows in
the market is very high. It, and several other correlations, along
with my statistical method of doing the correlations, were presented
in the MTA conference paper, "In Search of Truly Scientific Correlations".
These Astro Points, then, give points in which we expect the earth's
energy fields to be disturbed. The interesting thing is that the energy
shows up in a lot of different forms - sometimes it's an electromagnetic
field disturbance, sometimes it's a solar flare, sometimes it's a
proton shower, etc. But even though it arrives in different ways,
it almost always has a psychological effect. In fact, I have even
found a very high correlation to the highs and lows in crises in a
mental health clinic. Our environment absolutely does affect our
psychology.
I Produce Useful Results
Another thing I did was to take the cycle extraction technique that
my professor had shown me, and see what cycles I could extract out
of the Dow. I didn't quite understand his technique in detail, so
I invented a few of my own extraction techniques, based upon his idea
that one should never disturb the data when doing the extraction.
I've computerized several of these techniques. One of them is quite
simple, graphic and easily done by hand. It was published in my article
"Cycles Without Tears".
The Dow cycles that I extracted I call Astrodow 2, 3 and 4. I
publish and sell these as a set of turning points for trading the
S&P, OEX, XMI, or any other Dow clone. Astrodow 2 is roughly a turning
point every week, AD3 every month, and AD4 every quarter. These are
time points on which the Dow has turned throughout this century. I
mark my charts with colored lines for those dates, and watch the market
as it approaches these points. Using other techniques, such as trendlines,
Gann, Elliott wave, etc. I can usually tell, with a high degree of
confidence, whether this is a high or low. Excellent trading results
when I trade clusters of these points. For example, if I have an
Astrodow 2 and Astrodow 3 point within a day or two of each other,
and the market is coming down into a major Gann line or trendline,
I know that the point is a low risk buy point. Personally, what I
do is wait until the market does move in the expected direction, and
then enter.
Some of my other research involved building a cycle follower in which
I could extract the current magnitudes of cycles in the Dow and project
those forward, using a + or - 90 percent confidence band. At one point
in time, I was using this and all of a sudden the market blasted through
the roof of the confidence band. Investigating WHY that happened
led me to another great discovery - the discovery of the Overflight.
The Overflight turns out to be an extremely significant astrophysical
and market event. Results are available in my research report, Trading
the Overflight.
I Study the Masters
As you are beginning to see, my approach is to track down the
reason things happen, and what the real physical cause
and effects are. I look for the real mathematical relationships underlying
these market motions. I believe that to make money in the market
one must understand what is going on in the physical universe.
It's like the internal combustion engine on your car. You can drive
the car without ever understanding what's going on, but when
something goes wrong, understanding how the system is designed to
work and its basic principles, gives you a better chance to cope with
the situation. Thorough understanding gives you a real advantage.
Another man who followed this approach was W. D. Gann. Over the
years, I've done an intense study of his work. I've collected many
Gann original works. I was fortunate enough to become acquainted with
a true Gann expert. What I have learned is that Gann was a great experimenter,
and developed many market techniques, some of which are junk and some
of which are gems. I have been able to uncover many of Gann's
best pieces of work and uncover what they are based on astrophysically. Some
of this work probably goes beyond what Gann himself understood, simply
because I have had the advantage of more modern knowledge and more
powerful tools, such as the computer.
I have also uncovered the smoke screen that Gann put in front of
his work to protect the good stuff from the people who would rip it
off and attempt to teach it. There are still many of those people
around today. Many of them have picked up some of the basic ideas
of Gann. Many of these people have a working knowledge of the
basic ideas of Gann, but have not unlocked the fundamental principles
that underlie the Gann work.
As I studied Gann, I kept asking the question, "What was Gann actually
seeing? Why would it work?" As I did this, my research really accelerated. I
did several notable pieces of research. For example, I researched
the Square of Nine. I tracked down what it is, why it works, how
it is really build, where it came from, etc. I eventually discovered
how to extend it beyond Gann's version. I'll say no more about that
because I don't want to give away some of my best stuff. Let it
suffice to say that Gann was a genius, and an absolutely dedicated
researcher who left a fertile trail for others who would work as hard. I
am very glad he did.
I've also been a student of Elliott Wave. I've studied Elliott's,
Prector's and Frost's material for years. I've learned a lot from
Bob Prector, who is a top notch analyst of Elliott Wave. I don't
always agree with him, as we sometimes have different interpretations,
but I always respect his interpretation.
I've now gone beyond the basic Elliott theory, which simply gives
a set of rules for wave formation. I've been interested less in the
dogma of these rules and more in what clues they provide into the
nature of the underlying system and WHY the rules might work. Elliott
Wave makes use of Fibbonacci Ratios. I've tracked down the
very cause of these wave ratios. I can tell you with complete
confidence that they come from the planetary system. The waves
are formed by the summation of assorted planetary cycles. It is simply
the way the system is built. Although I used Elliott Wave theory
for over 15 years, I now use something better - The Hannula Market
Fractal, which is taught in my Cash In On Chaos video course.